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Preparing for budget challenging

Pesident Schill and Provost Coltrane sent the following message to campus:

December 6, 2016

Dear University of Oregon community,

Last Thursday, Oregon Governor Kate Brown released her budget for the FY 2017–19 biennium and proposed flat funding for all seven public universities. This is good news only in the sense that it could have been a lot worse due to the state’s estimated $1.7 billion budget deficit for the next biennium. The bad news is that flat funding from the state creates significant financial challenges for the UO.

You may recall that the UO joined with all of the other Oregon public universities in signing a letter this fall stating that we needed a combined $100 million in additional state funding to keep next year’s tuition increase below 5 percent. This proposed budget obviously falls well short of that goal. Oregon has still not returned to the levels of state support delivered to the UO before the economic downturn—about $80 million in 2008. The UO currently receives about $66 million in state operating support. Also bear in mind that over the last 20 years, both in Oregon and nationally, cuts to public support for higher education have shifted the burden of paying for a college degree to students and families. We will work tirelessly to seek additional funding from the state—and we call on students, faculty, staff, and other stakeholders to join with us in this effort.

We project that the UO’s educational and general operating expenses will increase approximately $25 million next year largely due to salary increases contained in our faculty and staff labor contracts, rising health-care costs, and the extraordinary increase in our required contribution to the state’s unfunded pension (PERS) liability. The way the state distributes funds over the two years will result in another $2.5 million reduction. When you add everything up, it means next year, if our funding from the state remains constant as proposed, the UO will face at least a $27.5 million shortfall. We must find, in some combination, additional revenues (e.g., tuition and fees) or expense reductions as a result.

Furthermore, it is important to recognize that the current governor’s budget proposal of “constant funding” is premised on the assumption that the state will generate nearly $900 million in new revenue from a variety of sources. If lawmakers are not able to agree on a revenue plan, the overall state budget will need to be cut further to bring it into balance.

Also, the university’s revenue shortfall for next year should not be confused with efforts by several of our schools and colleges to bring their budget into balance. This work is ongoing and will proceed along a parallel track.

As we plan for these uncertainties, our top priority is to protect our access and academic programs. Indeed, with the incredible opportunities presented by the gift of Phil and Penny Knight, our initiative to increase the number of tenure-related faculty by 80 to 100 members over five years, investments in student success, and planned initiatives around diversity and inclusion, the school is poised to make historic strides in building the sort of academic excellence that only a few years ago seemed out of our reach. Despite the very real financial challenges we may face, we will protect these efforts and keep our march toward excellence on track.

While we will not know the final state budget for many months, perhaps as late as July, we need to move ahead now in our planning. The Tuition and Fees Advisory Board began meeting last month to consider the budget situation and potential tuition and fee increases. The current budget realities mean it will be nearly impossible to keep the tuition increase below 5 percent, and in fact the percentage could rise much higher. We will join with our students in helping state lawmakers understand how this proposed budget affects higher-education affordability at the UO and across the state of Oregon.

In addition, we will need to look creatively at other options. Within the next few weeks, the president will appoint an ad hoc budget advisory task force to provide advice and ideas for raising additional revenues and reducing expenses. The task force will include members of the Senate Budget Committee as well as administrators, faculty and staff members, and students. It will begin meeting in early January. The traditional Budget Advisory Group, which works to make recommendations on strategic investments, will not be convened this year.

We also ask that all departments proceed carefully with any new hiring of administrative staff and non-tenure-track faculty over the remainder of this fiscal year. Existing searches and requests for hiring approval should be reevaluated with an eye toward whether the personnel are absolutely essential and whether the hiring could be delayed until July 2017, when we will have a better understanding of the overall budget. Ultimately, it is very likely that many of our units will see reductions to their budgets next year. In many instances, it will be better to handle these expense reductions through attrition rather than through layoffs or contract nonrenewals.

The governor’s budget is a starting place and nothing is set in stone. Over the next several months, we will work with counterparts at the other state universities to make the case to increase state funds for higher education. We invite all members of our community, including our alumni, the ASUO, and labor unions, to join us in this effort.

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